Pros and Cons of Buying Off-the-Plan

Bill Kim
Sep 6
2 min read

A shiny new apartment at a discounted price sounds like every investor’s dream.

But before you rush to sign on the dotted line, it’s important to weigh up the real risks and rewards of buying off-the-plan.

✅ Pros

1. More Time to Prepare

One of the biggest advantages is time.

Most projects take 1–2 years to complete, which means you only need to pay a 10% deposit upfront, then save aggressively before settlement.

Example: $500,000 property → $50,000 deposit now → another $50,000 saved before completion = 20% deposit ready at settlement.
Why 20% matters: Banks have tightened LVRs, usually requiring investors to have at least 20% equity.

💡 Tip: If you’d rather keep your cash free for other investments, you can use a deposit bond (though you’ll need conditional loan approval to qualify).

2. Potential Price Growth

You lock in today’s price. If values rise during construction, you pocket the gain.

Example: You pay $500,000, put down $50,000, and by completion the property is worth $550,000 → that’s a 100% return on your initial deposit.

3. Early-Bird Discounts

Developers want pre-sales to secure their project finance, which gives you leverage to negotiate.

Early buyers often get better prices.
You can also haggle if you’ve done your homework on comparable sales.

4. Stamp Duty Concessions (Owner-Occupiers Only)

For off-the-plan purchases, stamp duty payment can be delayed up to 15 months (or until completion).

⚠️ Note: This only applies if you intend to live in the property. Investors still face the standard 3-month deadline.

❌ Cons

1. Builder Bankruptcy Risk

If the builder goes under, the project may collapse:

You could lose 1–2 years waiting.
In worst cases, even your deposit.

👉 Always check your contract for a refund clause and stick with reputable developers. Banks are also more comfortable financing projects from established names.

2. Finance Risk at Settlement

The developer doesn’t vet your finances — but the bank will.

If the market dips or the bank values your unit lower than your contract price, you might be left scrambling.

Example: $500,000 contract → bank values at $450,000 → your 10% deposit isn’t enough, and you may need to inject extra cash.
If you can’t settle, you risk losing your deposit and even facing legal action.

💡 Tip: Studios under 40m² are harder to finance — banks see them as riskier. Aim for at least a 30% deposit on these.

3. Settlement Glut

When a big project completes, hundreds of units can hit the market at once.

Oversupply = softer prices if you sell immediately.
The smarter play is often to hold and ride out the wave.

📌 Bottom Line

Buying off-the-plan offers leverage, time, and potential discounts — but it comes with serious risks if the builder or the market turns against you.

Do your due diligence, build in a financial buffer, and only commit if you’re confident you can ride out the bumps.